“Uber Sees Itself as the Next Potential Amazon”—But Others See It as the Next Yahoo

In Silicon Valley, for better or worse, technology companies often inherit the character of their founders. More than a decade into its life, Facebook still exudes Mark Zuckerberg’s chilly realpolitik. Even now, Twitter embodies the turbulence of its early years, when Jack Dorsey and Ev Williams competed for the top position on the greasy pole on a dizzying basis. Apple, even under the leadership of Tim Cook, still levitates on Steve Jobs’s signature products—just as it evidences his signature self-confidence while it brazenly enters new markets, such as music and content.

More than a year after his ouster as C.E.O., Uber still very much retains the character of Travis Kalanick—ubiquitous and brilliant, undoubtedly, but also scattered, petulant, immature, and vulnerable to its own hypercompetitive ambition. I have been reminded of this corporate genealogy frequently over the past few months, amid seemingly innumerable scandals at Uber. Some have been significant, such as a driverless-car fatality, allegations of an Uber driver murdering his passenger, and another Uber executive being disciplined for making sexually suggestive comments. Others have been stranger, but almost metaphorical in their significance, like the reports of an Uber Eats driver caught on-camera stealing someone’s French fries(this is a thing), or the passenger who was forced to drive himself home, while his Uber driver was passed out in the front seat because he was too drunk to drive. (Yes, that happens, too.) Dara Khosrowshahi, Uber’s current C.E.O., has generally been able to curtail the chaos, but I have to imagine he wakes up some mornings and wonders: what’s next? Over the summer, when I asked Khosrowshahi to describe his job, he told me, “It’s quite literally like drinking from a fire hose.”

But the mother of all scandals erupted this month when Jamal Khashoggi, a Washington Post Global Opinions writer and Saudi dissident, disappeared inside the country’s consulate in Istanbul, never to return. It was a horrific and appalling nightmare on the kingdom’s hands, and one that inelegantly coincided with Saudi Crown Prince Mohammed bin Salman’s much-ballyhooed investment conference, Future Investment Initiative, which has become the public ring-kissing ceremony for the global financial elite, virtually all of whom have accepted some form of patronage from the country’s vast sovereign wealth fund, the Public Investment Fund.

Khosrowshahi, in particular, found himself caught between condemning the apparent murder of a journalist, and acknowledging the fact that the Public Investment Fund had poured some $3.5 billion into Uber. (Yasir Al Rumayyan, a member of the Public Investment Fund, sits on the company’s board.)

Khosrowshahi, to his credit, didn’t blink. He pulled out of the conference immediately. That said, as one company insider familiar with the situation explained to me, “It’s a lot easier for Uber to make this decision, given that the money is already in Uber’s bank account; it’s not a new investment the company needs.” Nevertheless, Khosrowshahi’s dilemma suggests the fact that technology and government and politics are blurring together in unforeseen ways, with once unimaginable consequences.

But it wasn’t necessarily all hellacious news for Uber this week. As the Khashoggi crisis unfolded, The Wall Street Journalreported that the company had received proposals from Wall Street banks estimating its initial public offering at a market valuation as high as $120 billion, virtually twice its current private-market valuation, and larger than the combined market capitalizations of General Motors , Ford Motor Company, and Fiat Chrysler Automobiles. It’s not uncommon for Wall Street bankers to overstate an estimate in the hopes of winning the eventual I.P.O. underwriting business. But even so, the Journal story re-ignited a familiar debate between Uber haters and admirers in Silicon Valley. It was neatly summed up by Bloomberg’s Shira Ovide, who pointed out on Twitter an inherent riddle involving the company. “$120 billion sounds nuts but isn’t,” she said. But then continued: “even a successful I.P.O. at that stratospheric valuation doesn’t answer whether Uber is a viable, lasting business.”

The Uber insider explained to me that comparing the company to another auto behemoth, like Ford or G.M., is like comparing Amazon to Barnes & Noble. In fact, this person said, you can’t even compare Uber to Lyft. Lyft, after all, is a national ride-sharing business. Uber, on the other hand, has a large, global footprint, and is possibly a primordial holding company for a series of future companies, which is what Google attempted to be before spinning its holding company off into Alphabet. Uber already has one of the largest food-delivery platforms around today, and it is expanding its freight business, which has the possibility to grow infinitely. And then there’s the driverless car I.P. that the company owns, not to mention the investments in other global ride-sharing services, including Didi Chuxing (Uber’s share is north of $10 billion), Yandex in Russia, and others. You add all those things up, the internal argument goes, and you can easily imagine the company being worth double what it was a year ago. “Some people see Uber as a car company,” the person said to me. “Uber sees itself as the next potential Amazon.”

Still, there are plenty of people who see it as the next potential Yahoo. “Uber is a debt-crippled mirage of a company, worth nothing,” the writer Julian Gough posited on Twitter. “Its backers want to get their money out before the onrushing financial crash makes that impossible. Do not buy shares.” Gough predicts that rather than dance in a rain cloud of billions, “Uber will go bankrupt within three years.”

Gough is gesturing toward a fervent argument within some sectors of Silicon Valley. Unlike Amazon, which has re-invested its profits into its business, Uber is constantly chasing new parts of its old business. For example, a study released last year found that 96 percent of Uber drivers quit working for the company within a year. (It’s no wonder, when the company’s algorithms are misleading its drivers.) And as Len Sherman of Columbia Business School noted last year, the problem with Uber’s entire business model is that it chases an industry that was already financially broken. “The taxi industry that Uber is seeking to disrupt was never profitable when allowed to expand in unregulated markets, reflecting the industry’s low barriers to entry, high variable costs, low economies of scale, and intense price competition,” Sherman wrote. “Uber’s current business model doesn’t fundamentally change these structural industry characteristics.”

Uber might defend itself against this critique by saying that it is not trying to replace taxis, but rather provide a new platform for logistics altogether, and that includes one in which people no longer need cars. But I’ll say this: last summer I tried the no-car-only-Uber-and-Lyft thing, and it was way more expensive than owning a car, and totally and utterly impractical—not to mention the fact that my wife ended up with a Trumpian conspiracy-theorist Uber driver who was insistent that Hillary Clinton was secretly behind Watergate (not kidding) and personally got Richard Nixon impeached (yep!). The one place Uber could be incredibly fruitful, which critics don’t criticize, is with trucking and freight deliveries. And as Khosrowshahi told me onstage last week at The Vanity Fair New Establishment Summit, there’s a huge business to tap into with grocery delivery—unless Amazon, which owns Whole Foods (which owns a chunk of Instacart), gets there first.

Uber certainly made it through one of the biggest burning balls of corporate excrement I’ve ever seen when it managed to quell its board chaos, oust its unruly and embattled co-founder, and recruit Khosrowshahi to take over. But that’s nothing compared to what it will face in its next chapter when Uber opens its books to go public, hits the public markets, and the dawn of driverless technology truly arrives. Within this time frame, as I have previously reported, many also expect Kalanick to try to retake his company once again. Khosrowshahi, who is set to receive a $120 million bonus if Uber goes public at a $120 billion valuation by 2019, might be perfectly wise to let him do just that.